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Plunge in Poultry Prices Hammers Punting Farmers

by 5m Editor
14 July 2009, at 11:55am

VIET NAM - After selling 2000 chickens in early 2009 and earning big money, Nguyen Huu Cong in Xuan Dinh village of Dong Nai province borrowed money to expand his poultry production by three times.

However, Mr Cong has not been lucky. Now, when he plans to sell the new batch of 6000 birds, the market price keeps falling. His production cost for every kilogramme of ‘three emperor’ chickens is 26,000 dong, while the sale price is now just 20,000 dong. Cong says he will lose 50-60 million dong.

Even though sales prices are low, chicken have been selling very slowly. Meanwhile, to feed the fowls, Mr Cong has to purchase 20 sacks of bran a day for 5 million dong.

"Last week I chopped down banana trees to feed my fowls and reduce my outlay for bran. However, now I am running out of banana trees," he said.

A lot of farmers in the eastern end of Dong Nai province face the same problem. Nguyen Trong Huy in Bao Hoa village said that he tried to sell chickens as the price dropped to 22,000 dong per kilogramme. However, Huy could only sell 7000 fowl. To feed the remaining fowls, Huy spends 2 million dong per day. He estimates he will lose nearly one hundred million dong.

Prices Pushed Down by Oversupply

Food processing companies and merchants agree that the farmers’ problem is oversupply. Several months ago, the poultry price surged to 47,000 dong per kilo, while the production cost was just 26,000 dong. The attractive profit prompted people to raise chickens. Some farmers mobilized capital from all sources, including loans from relatives and banks, to invest in poultry farming.

Dang Quoc Khanh, also of Bao Hoa village in Dong Nai, said that three months ago, he invested two billion dong, money borrowed at an interest rate of two percent per month. Mr Khanh now sits in a hot seat. He must sell 50,000 birds within two weeks to get back the money he needs to pay the debts. Meanwhile, the price has been sliding dramatically.

Nguyen Hong Son, a poultry processor who provides ‘three emperor’ chicken to the HCM City market, said that the number of birds on his company’s ‘satellite’ farms has reached 600,000 fowls, 100,000 more than usual. There are probably another 500,000 birds on non-affiliated farms, Son estimates.

Mr Son’s enterprise provides 6000-7000 chickens to HCM City every day. So many birds are now offered that it’s difficult for consumption to keep up, he says. The biggest sufferers will be the farmers who have jumped into the chicken-raising business but do not have contracts with wholesalers.